U.S. Supreme Court To Hear Suit Against HMOs Over Incentives

Can HMOs be sued for the practice of offering bonuses to physicians who help them keep the cost of care down? That's a question the U.S. Supreme Court has agreed to decide this term, in the first major case involving HMO liability to reach the high court.involving HMO liability to reach the high court.

An Illinois woman says her appendix rupture could have been avoided had her physician not delayed diagnostic tests for more than a week so they could be performed at a lower cost at a facility owned by her HMO.

The woman alleges that her physician stood to gain financially by limiting referrals, and that the health plan violated its duty to members by denying proper care. A lower court had dismissed her claim, but it was later upheld by the Seventh U.S. Circuit Court of Appeals. That court ruled that incentives do not necessarily constitute a breach of responsibility, but added that when incentives lead a physician to withhold needed care, liability can arise.

Elsewhere, liability cases have moved forward. A federal appeals court ruled that a suit against Aetna U.S. Healthcare can proceed in Pennsylvania state courts, on grounds that HMOs are not immune from state malpractice suits. Similarly, the Illinois Supreme Court ruled patients may sue HMOs for physician negligence. (To read about the implications of the Illinois cases, see this month's "Ethics" column)